Singapore government’s investment arm, Temasek Holdings and other leading global investors have agreed to buy up to 9 % stake in Bharti Infratel, a wholly-owned subsidiary of Bharti Airtel for a total of USD 1 billion. After the deal, the valuation of the company will reach up to $12.5 billion.

This placement highlights the confidence of leading global investors in the Indian telecom sector, which is now the fastest growing telecom market in the world as per the statement of Bharti Group. Bharti group is one of the largest telecom players in India and in first 10 all over the world in terms of subscriber base.

The enterprise valuation has been agreed to be in the range of $10 to $12.5 billion. The final valuation will be determined on the basis of Bharti Infratel's actual operating performance in fiscal year 2008-09, Bharti Airtel said in a statement.

Other investors in Bharti Infratel include Macquarie, Citigroup, Investment Corporation of Dubai, AIF Capital and India Equity Partners. Temasek will be the largest investor in the company.

Bharti Infratel, the tower arm of Bharti Airtel, already owns more than 20,000 phone towers in seven circles, inherited from its parent. The company holds approximately 42% stake in Indus Tower, a JV among Bharti Airtel, Vodafone and Idea Cellular.

Akhil Gupta, Joint Managing Director of Bharti Airtel said, “The money raised will be used for rolling out new towers. The board is yet to take a final decision on the rollout of towers and capex (capital expenditure plans).”

The Selling stakes in the tower business has fast becoming an eye-catching option for the telecom companies which are hit by hard competition and spiraling call rates.

Recently, Spice Communications Ltd, which operates mobile services in Karnataka and Punjab has announced that the company has sold around 875 telecom towers for Rs. 600 crore to Quipo Telecom Infrastructure Ltd, an independent tower company.

Earlier in July, India’s second largest cellular operator, Reliance Communications sold a 5 per cent stake in its tower company for Rs 1,400 crore.